Ghana and the USA have signed an agreement to increase generation in the power sector, modernise transmission and address the financial stress of the utility companies.

Speaking after the official signing of the agreement between the countries, the Minister of Energy Emmanuel Armah Kofi Buah said the MOU will go a long way to address the challenges in the power sector.

He signed on behalf of Ghana.

The US Ambassador to Ghana Gene Cretz who initialled for his country said the MOU lays out the mutual goals set out for the power Africa initiative.

He said the US will play a key role in helping Ghana solve her energy crisis.

Mr Cretz noted that the US is willing to help Ghana reach its target of generating 5,000 megawatts of electricity by 2016.

Earlier at a breakfast meeting, Mr Cretz announced that the US is preparing a large grant to support Ghana's power sector through the millennium challenge corporation compact two.

He said if the momentum on the reform agenda continues, the MCC second compact could be finalised by August this year.